Southern Michigan Bancorp (OTCMKTS:SOMC – Get Free Report) and Bank OZK (NASDAQ:OZK – Get Free Report) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.
Analyst Recommendations
This is a breakdown of current ratings for Southern Michigan Bancorp and Bank OZK, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Southern Michigan Bancorp | 0 | 0 | 0 | 0 | N/A |
| Bank OZK | 2 | 5 | 1 | 0 | 1.88 |
Bank OZK has a consensus target price of $46.71, indicating a potential upside of 7.36%. Given Bank OZK’s higher probable upside, analysts plainly believe Bank OZK is more favorable than Southern Michigan Bancorp.
Dividends
Southern Michigan Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 3.5%. Bank OZK pays an annual dividend of $1.60 per share and has a dividend yield of 3.7%. Southern Michigan Bancorp pays out 25.8% of its earnings in the form of a dividend. Bank OZK pays out 26.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Bank OZK has increased its dividend for 28 consecutive years. Bank OZK is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares Southern Michigan Bancorp and Bank OZK’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Southern Michigan Bancorp | 12.88% | 10.81% | 0.72% |
| Bank OZK | 27.04% | 14.50% | 2.01% |
Earnings & Valuation
This table compares Southern Michigan Bancorp and Bank OZK’s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Southern Michigan Bancorp | $73.31 million | 1.08 | $10.90 million | $2.33 | 7.40 |
| Bank OZK | $2.25 billion | 2.19 | $690.78 million | $5.97 | 7.29 |
Bank OZK has higher revenue and earnings than Southern Michigan Bancorp. Bank OZK is trading at a lower price-to-earnings ratio than Southern Michigan Bancorp, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
86.2% of Bank OZK shares are held by institutional investors. 6.7% of Bank OZK shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Volatility & Risk
Southern Michigan Bancorp has a beta of 0.26, suggesting that its share price is 74% less volatile than the S&P 500. Comparatively, Bank OZK has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.
Summary
Bank OZK beats Southern Michigan Bancorp on 14 of the 16 factors compared between the two stocks.
About Southern Michigan Bancorp
Southern Michigan Bancorp, Inc. operates as the bank holding company for Southern Michigan Bank & Trust that provides a range of commercial banking services to individuals, businesses, institutions, and governmental agencies primarily in the southwest Michigan communities. Its deposit products include interest and non-interest checking, savings, and various types of money market accounts; time, savings, and demand deposits; and certificates of deposit and IRAs. The company also provides home mortgages and equity loans, home equity lines of credit, VA and FHA home loans, USDA rural development loans, and auto/personal loans; business loans, such as lines of credit, term loans, commercial real estate loans, commercial and industrial loans, agriculture loans, letters of credit, small business administration loans, and capital access loans; industrial, construction, real estate, and inventory loans; and consumer lending products comprising direct and indirect loans to purchasers of residential real property and consumer goods. In addition, it offers trust and investment services that include investment management, trustee, IRA rollovers and retirement plan, institutional and personal custody, estate settlement, wealth management, estate and wealth transfer planning assistance, charitable gift planning assistance, and cash management custody services; and safe deposit box and automated teller machine services. Further, the company provides bill pay, e-statements, ACH, wire transfer, remote deposit capture, and insurance services, as well as ATM, debit, credit, and gift cards. The company was founded in 1871 and is based in Coldwater, Michigan.
About Bank OZK
Bank OZK provides various retail and commercial banking services for individuals and businesses in the United States. The company offers deposit services, including non-interest bearing checking, interest bearing transaction, business sweep, savings, money market, individual retirement, and other accounts, as well as time and reciprocal deposits. It also provides trust and wealth services, such as personal trusts, custodial accounts, investment management accounts, and retirement accounts, as well as corporate trust services, including trustee, paying agent and registered transfer agent services, and other related services. In addition, the company offers treasury management services comprising automated clearing house, wire transfer, transaction reporting, wholesale lockbox, remote deposit capture, automated credit line transfer, reconciliation, positive pay, commercial card, and other services, as well as zero balance and investment sweep accounts. Further, it provides real estate, consumer, small business, indirect recreational vehicle and marine, equipment, agricultural, commercial and industrial, government guaranteed, lines of credit, homebuilder, and affordable housing loans; lender and structured, business aviation, and subscription financing services; and mortgage and other lending products. Additionally, the company offers ATMs; telephone, online, and mobile banking services; credit and debit cards; safe deposit boxes; and other products and services. The company was formerly known as Bank of the Ozarks and changed its name to Bank OZK in July 2018. Bank OZK was founded in 1903 and is headquartered in Little Rock, Arkansas.
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